The UK banking landscape continues to shift inevitably towards digital. Bank branch numbers have fallen by over 68% from 1986 to 2024, leaving our high streets with fewer than 7,000 locations, according to research from the British Banking Association (BBA) and the Office for National Statistics (ONS).
During the pandemic, the UK public’s reliance on digital banking necessarily accelerated. As uptake increased, customer expectations around banking app functionality shifted accordingly. Banking apps can no longer just present digital versions of basic branch services. They need to encompass services including financial advice and money management tools.
In many ways, banking apps have become the primary tool for forging new customer relationships and cementing existing ones, and the competition between emerging fintechs and traditional financial institutions in this valuable space has never been fiercer.
According to Curinos’ eBenchmarkers, however, the growth of active digital users is plateauing. More than 70% of app sessions result in no meaningful engagement, which means users are struggling to consistently interact with apps’ services. The challenge is no longer about convincing users to download an app but ensuring they use it and engage with its offerings.
The way forward? Financial institutions will need to apply innovation to their app functions to maintain customer engagement. But the sting in the tail is that different consumer demographics have different wants, needs and expectations.
Banking’s Generational Divide
The majority of older generations, such as Boomers, exhibit much higher homogeneity than younger demographics like Gen Z. They’re largely consistent in the capabilities they want and expect from their banking apps, and their needs are predictable – ease of bill payments and reliable money transfers.
Our data show that only 38% of Gen Z favour ease of money transfer versus 61% of Boomers, signalling a stark divide in how banks’ digital services are valued. Ensuring a secure and efficient regular transaction service from banks remains a key priority for users. This indicates that trust remains firmly rooted across their expectations.
As the first generation to have grown up as digital natives, Gen Z, on the other hand, are more inclined to demand and expect more sophisticated functionality from their apps.
Banking apps are continuously offering enhanced features to build long-term relationships with customers. Whether this comes from money management tools, hyper-personalised chatbot advice or saving recommendations, the reach of AI-innovations is broadening. This is especially enticing to younger users, those often opening first accounts and curious to try the services offered within apps.
As a result, for financial institutions to remain competitive. investing in seamless functional features is no longer sufficient. And for most banks, this poses a significant challenge: How can they balance innovation to keep younger users engaged without driving away older cohorts?
But There’s a But: Engagement is Tanking
Despite mobile’s now well-established position delivering core banking services, our eBenchmarkers show that login rates are trending downward year-over-year across almost all age groups (only those 80+ have seen an increase). What’s striking is that it’s most prominent across younger cohorts, where digital app features are most valued.
Poor digital engagement puts banks at risk of losing transactions, balances and, ultimately, primary relationships, to competitors. The more engagement a consumer has with a brand, the higher the chance that the brand can demonstrate enough value to motivate them to consider another product or service. In our short-attention society, banks that don’t engage will be left behind.
Engagement Means More Data with Which to Engage
Every interaction generates data that improves their ability to deliver increasingly relevant experiences. High-engagement brands can predict customer needs before they’re expressed, deliver contextual financial guidance at optimal moments and create personalised product recommendations based on actual usage patterns. A virtuous cycle.
In contrast, banks with declining engagement operate with sparse data. They have a reduced ability to identify emerging customer needs, less insight into which features drive retention and weaker foundations for developing AI-powered financial tools that customers increasingly expect.
The Future’s Here
The generational shift isn’t a future trend to monitor – it’s already reshaping competitive dynamics today. Banks must move beyond assuming functional excellence alone is enough to retain customer relationships.
To serve younger demographics effectively and maintain relevance in an increasingly competitive landscape, developing value-added features that address broader financial wellness needs is essential. In this respect, the engagement crisis is a wake-up call. Banks that act decisively to build compelling digital experiences will establish data advantages and customer relationships that compound over time.
The question isn’t whether this transformation will occur, it’s whether financial institutions will heed the alarm clock.
Action is of the essence. Login rates are declining even as customer expectations are rising, and the data advantage of engagement leaders is growing stronger with each passing quarter. Banks that recognise this reality and act on it will thrive. Those that don’t will find themselves increasingly irrelevant to the customers they most need to serve.
